Indian Infrastructure

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Infrastructure in India include transportation, agriculture, water management, telecommunications, industrial and commercial development, power, petroleum and natural gas, housing and other segments such as mining, disaster management services, technology-related infrastructure.

Important sectors in Infrastructure in India:
Within the Infrastructure of India, the transportation sector is the most important, including the aviation, ports, roads, rail system and logistics. The agriculture sector comprises infrastructure-related storage facilities, construction relating to agro-processing projects and reservation and storage of perishable goods. Among others essential sectors, real-estate development, including industrial parks, special economic zones, tourism and entertainment centers, educational institutions and hospitals and solid waste management systems, also play significant role in Indian economy.

Finance for Infrastructure in India:
The rules for government-owned infrastructure companies for raising funds through initial share offerings are made flexible by the Securities and Exchange Board of India, which naturally will increase the flow of investment in the Infrastructure of India. To bridge the wide gap between the potential demand for infrastructure for high growth and the available supply, there is urgent need for a close partnership between the public and private sectors, with a vital role reserved for foreign capital. In India infrastructure sector itself is becoming an attractive investment area for FDIs. To encourage foreign funds flow into the Infrastructure in India, the Indian Finance Ministry has allowed Foreign Institutional Investors (FIIs) also to invest in unlisted companies. FIIs now can invest 100 per cent of their funds in the Infrastructure in India. In order to make the core sector more attractive for FDI, the Cabinet Committee on Foreign Investment (CCFI) has modified the 49 percent cap on foreign equity in the infrastructure sector to make fund mobilization easier. This major policy decision which will indirectly raise the foreign equity investment in infrastructure sector to well over 51 per cent.

Besides, even if allocation in the Infrastructure in India is raised with a greater inflow of FDI and a large participation of private sector, the immediate problem will still remain, since, infrastructure is subjected to long gestation period. Consequently, the inadequacy of Infrastructure in India will continue for quite some time, unless technology upgradation can be done in the infrastructure production, including construction activities, for reducing the gestation lags and simultaneously improving the quality of products. With this infrastructure limitation any indiscriminate growth may lead the economy of the country to a situation of over-heating and a further rise in inflation.

Under the Infrastructure in India the most essential field in which there should be development is in the urban infrastructure. Except for a few large projects in a handful of cities, paucity of urban infrastructure projects is a standing problem. Although city mass transport systems and airports have found place in developmental plans, essential services such as roads, drinking water, sewerage management, drainage, and primary health are still greatly under developed.

However, with the economy growing at more than at the rate of 8 per cent, the government is aiming at an economic growth rate of 8 per cent during the Eleventh Plan (2008–12), for which the government is taking necessary steps to develop the Infrastructure in India.

Last updated On: 7th May 2011

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